One Week in Europe: Greek bailout and new peace talks with Moscow

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EU Parliament President Martin Schulz and the leaders of Parliament’s political groups met US vice-president Joe Biden during his visit to Brussels on February 6, 2015

Top news this week: Greece’s new government went on European tour chasing a new bailout deal. They got support in some capitals, but not in the most important one – Berlin. And important EU leaders went to Moscow to mediate peace in Eastern Ukraine with Russian President Putin.

On Friday (February 6), the EU and its partners intensified the diplomacy efforts to mediate peace in Eastern Ukraine. German chancellor Angela Merkel and French president François Hollande went to Moscow to present a new peace plan to Russian president Vladimir Putin.

At the same time, US vice president, Joe Biden, went to Brussels to talk about Ukraine. The day before, US secretary of state, John Kerry, met with President Poroshenko in the Ukraine capital Kiev.

The conflict in Eastern Ukraine and Russia’s involvement will also be the main topic for EU foreign ministers who meet on Monday next week (February 9).

Greek government on European bailout tour

First the Greek new government rejected new loans from the current bailout programme and refused to talk to the Troika. Then Greek prime minister, Alexis Tsipras, and finance minister, Yanis Varoufakis, went on an intensive tour travelling across Europe trying to raise support for a new deal.

Varoufakis presented the idea to swap the country’s debt for new types of bonds, one linked to Greek growth and the other with no maturity, i.e. an eternal bond. In return Greece will run a surplus in its primary budget, before paying interests of 1 to 1,5 percent and will no longer seek to write off the massive Greek debt amounting to around 175 percent of GDP.

Varoufakis and Tsipras got support in Paris and Rome. And when the prime minister met with EU leaders in Brussels, he was optimistic.

“We want to re-correct this framework, not smash this framework. And we believe that in this framework, we could find a common, viable solution for our people, for our common perspective. I’m very optimistic after these discussions that we are in a good way. Of course, we don’t have already an agreement, but we are in a good direction to find a viable agreement,” Tsipras told the Brussels press on Wednesday (February 4).

No support from Germany

However, in Berlin the Greeks were met with less optimism. After a meeting with Varoufakis, German finance minister, Wolfgang Schäuble, said they had to agree to disagree. Actually they didn’t even agree on that as the Greek minister said he wouldn’t describe the result of the meeting like Schäuble did.

Not far from Berlin, the European Central Bank (ECB) decided in Frankfurt to put pressure on the Greeks to reach a quick agreement. They threatened to not accept Greek bonds as collateral for loans as from February 11, which could cause major cash flow problems in the crisis-hit country.

More friendly talks on trade

In Brussels there were more optimistic discussions on the future EU-US trade deal. It was the first negotiating round for the new EU Commission and the aim was to move the talks forward on a broad range of issues, among them market access.

However, one item was off the negotiating table – the controversial investor protection scheme, ISDS.

The trade Commissioner, Cecilia Malmström, says she was asked by the EU member states to discuss ISDS in the EU-US trade deal and she thinks that some kind of investor protection is needed in order to reform current ISDS agreements.

“It’s in the mandate first of all, given unanimously by 28 member states’ ministers. But it is also very clear, I have made that clear, President Juncker has made that clear, that ISDS in its current form is not acceptable. It needs to be quite dramatically reformed and this is what we are looking at: Is it possible to reform and to have some sort of system that protects investments against discrimination? Does that in a way that ensures that states can regulate and protect their citizens, that could never be put in question, and does that in a legitimate and transparent way?”  Malmström told Euranet Plus.

Fight against tax evasion

Companies dodging tax and how to stop them was another hot potato this week in the EU. On Tuesday, February 3, the European Commission opened an investigation into the Belgian excess profit tax ruling system.

“We were wondering if someone is getting a benefit that is distortive in competition terms. Because this seems not to be open for Belgian firms standing alone or for Belgian corporation standing alone. It seems to be open for multinationals. I think that taxation should be fair so that everyone pays their fair share. And therefore of course we would like to know much more about what is actually going on,” said EU Competition Commissioner, Margrethe Vestager, to Belgian Euranet Plus member RTBF.

The European Parliament also talked about tax evasion and the group leaders decided to establish a special committee on tax evasion.

The Greens, who had called for an inquiry on tax evasion, were disappointed. They argued that a special committee is a weaker weapon, because it doesn’t have access to national tax documents which an inquiry would have.

Waste package to be wasted

The EU Commission is likely to withdraw a proposal on new waste management rules, despite major opposition from the European Parliament and EU environmental ministers.

In an interview with Euranet Plus, the EU Commissioner responsible for environment, Karmenu Vella, said a withdrawal is the right thing to do and he repeated the Commission promise to come back with an even better proposal.

“I think we should be judged when the new proposal is out. Because there is no intention or what so ever that we go down on the objectives of the present proposal, but we want to make it more holistic, from the product and from the consumption, and hopefully this will help us achieve better results, better competitiveness, because at the end of the day, that is what we want,”  Vella said.

EU should have more own resources

The European Parliament also discussed the EU financing system and own resources. Italy’s former prime minister, Mario Monti, who is now chairing the High Level Group on Own resources, was there and said that the current system creates a lack of trust among member states.

“This lack of trust is also fed by a system of financing the budget of the European Union. So largely based on national contribution. It’s a low level marchandage [bargaining], where if a member state gains, another one looses. The European Union is exactly the opposite of this. If it works, everybody gains,” Monti said.

The high-level group says increased own resources for the EU could come from VAT, a financial transaction tax or a European tax.

• Author: Andreas Liljeheden, Euranet Plus News Agency

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